Five years ago, I signed up for Sirius radio service. When my wife got a new car with a free preview of XM we became a two-service family. Despite my protests, we continue to keep both services for the programming. As my annual re-uppance on Sirius draws closer, I’ve started wondering why I would/should continue to pay for Sirius as a satellite-delivered service? In the past year, SiriusXM clients for mobile handsets have cropped up (browser-based and stand-alone apps which together cover all the programming) and coincidentally, I’ve stopped using my satellite receiver altogether. The result: 4x fewer dropouts on my daily commute, better quality Sirius and XM programming over my phone than I’ve ever experienced via satellite, even over AT&T’s burdened network. Which started me thinking – is there a future for Satellite radio in space?
- Dedicated satellites are costly. When you consider the $100M in annual capex required to launch and operate satellites (excluding engineering costs) to support the SiriusXM network is it really worth it? The strategy was borne out of a time when data access on a mobile device was largely a pipe dream. The Sirius FM-5 satellite took three years from announce to launch in June 2009, and just went active with a lifespan of just 15 years. In the past three years, large swaths of wireless spectrum have been freed by the digital cutoff, 3G+ networks are rolling out across the US, on hardware expected to be software-updatable to 4G technologies such as LTE. Wouldn’t it be better to start moving now to terrestrial digital delivery as a part of a mixed-media network?
- Subscriber churn continues to be a problem. Set aside the high dependency on trial in new cars as a vehicle for acquiring subscribers – last year Sirius XM saw nearly a third of their subscribers churn for a net gain of 1.6M subscribers to 19M to end the year. There’s a problem with value prop for consumers.
- Wireless operators dealing with “FCC: The Next Generation”. With the FCC expected to unveil a plan for open Internet access for broadband providers, wireless operators may be next. Compounded by increasing pressure over exclusive phone deals, and the FCC’s interest in the “He said/She said” situation over the iPhone App Store approval of Google Voice, will mobile networks be democratized and need to focus more on content and service differentiation for growth?
Seeking Alpha has a good overview of the bull/bear/ludicrous market situation with SiriusXM. The de-listing problem should be solved soon with a reverse stock-split approved last May, however saddled with debt, and ongoing high costs, one has to wonder if SiriusXM is considering a “Plan B” alignment with one or more operators a little closer to the ground? In the meantime, I’ll be dropping my Sirius satellite subscription in favor of Internet delivery to my phones and Sonos. It may only save me a few bucks a month, but it’s worth it.